Summer already seems so far away and, whisper it quietly, the talk is now all about Christmas and making sure homebuyers get moved in beforehand.
Data released by the Homeowners Alliance suggests that, to achieve this, sellers need to have their property on the market by 20 October!
Christmas aside, we have a few months of activity to get through to make sure we all cap off a quite remarkable year. It has been interesting to hear some estate agents say they have seen stock levels tentatively increase once more as people return from summer trips.
What has also been nice — well, weird and nice — is the return of events where real people actually see each other. These usually start off hesitantly with the words, ‘So hi, yeah, er, are we, I mean, are you shaking hands/hugging/kissing?’ All of which seems to be forgotten a couple of hours later after a few glasses of vino.
There is no reason to believe we are on capricious ground
We should, of course, all remember there is still a nasty bug out there and, most of all, respect others. But it really has been a mental boost to see a host of you in the flesh again. Let’s hope this stays the norm and we never have another lockdown.
Mind you, being good Brits we now have something else to, literally, fight over: petrol. We do love a panic buy, don’t we? Hopefully those filling up dozens of jerry cans are not storing it among their nice, dry, crisp toilet-roll mountains in their garage with the dodgy light switch….
Inflationary fears
None of this is doing anything to calm the general inflationary fears that pervade the economy. Inflation rose from around 0.5% to above 3% in August and is expected to get to around 4% to 5% before calming down again.
Energy prices are the number-one contributing factor and, as shortages of various things brought about by a combination of the pandemic and Brexit (yes, I said it) cause prices of those things to increase, it will be interesting to see whether the Bank of England can indeed hold its nerve.
Some estate agents have seen stock levels tentatively increase as people return from summer trips
Financial markets seem more concerned that rates will have to rise to curb these inflationary pressures. But there is much to play out in the economy and the dreaded bug has not gone away before a potential new spike amid the traditional flu season. Confidence, though growing, is still fragile, so the Bank is expected to hold off making any rate rises for some time yet.
It is, of course, a delicate balancing act and media outlets are already talking about a cost-of-living crisis, especially where winter fuel bills are concerned. We know our property market is very much connected to consumer sentiment but, with unemployment still low, the possibility of wage inflation and a continuation of ultra-low rates for a while, there is no reason to believe we are on capricious ground.
As a result of the above the money markets are back to school, with three-month Libor rising 0.015% to 0.085%, while three-month Sonia is back out clubbing, up to 0.09%.
Swap rates themselves have gone back to work with a vengeance and have risen across the board.
Since the last column:
2-year money is up 0.21% at 0.70%
3-year money is up 0.23% at 0.83%
5-year money is up 0.27% at 0.98%
10-year money is up 0.30% at 1.16%
Now the stamp duty rush is behind us, lenders, valuers and conveyancers should be able to return to a more normal service, although for some there is still work to do. I hope there is a period of reflection, and lenders and conveyancers look at some of the great technology out there that can help them to get through something similar in the future without so much disruption.
Overall, though, we can pat ourselves on the back for a collective job well done.
The mortgage market itself remains in decent shape and what has helped is the further tweaking of criteria to match the continuing prevalence of low rates.
Halifax, for example, has increased its maximum loan size on 90% loan-to-value products, back up to £750,000, and will continue to support higher-LTV borrowing with more offerings as well as new affordable housing products.
It will be interesting to see whether the Bank of England can hold its nerve
The lovely Accord has also increased its 90% borrowing level to £750,000, while Skipton Building Society will lend 80% LTV up to £1,000,000.
HSBC has introduced the lowest 95% LTV product with a rate of 2.69% fixed for two years with a £999 fee. It has also raised its income multiple to 5.5 times up to 90% LTV for borrowers earning above £100,000.
Barclays has increased its income multiple to 5.5 times up to 85% LTV for clients earning £75,000 or a joint income of £100,000. For repayment mortgages it will lend up to five times income for those earning a combined £60,000 per annum or more.
Self-employment criteria
There has also been a plethora of changes by lenders around self-employment criteria — too many and detailed to list here. Some are good and some more cautious, while those on a contract are finding it harder than ever, especially with the IR35 changes.
In the more specialist arena, the very helpful Aldermore has reintroduced its Level 2 and Level 3 ranges for those who have experienced credit blips, as well as cut some fees and rates.
It is a delicate balancing act and media outlets are already talking about a cost-of-living crisis
The recent rate war has engulfed pretty much every section of the market and buy-to-let (BTL) is no different. So, with a fanfare of trumpets we see the first sub-1% rate in BTL with The Mortgage Works’ two-year fixed at 0.99%. It does come with a 2% arrangement fee, while Platform’s 1% rate has a £2,495 fee.
Looking ahead we should be in for a good start to next year as reports suggest there is almost £40bn-worth of remortgage business up for grabs. As we have all worked so hard to get new clients, it would be a shame not to hold on to them at the back end, so a good retention strategy is key. It may be worthwhile looking at tech solutions such as Dashly and Eligible.
Finally, in the later-life market it is good to see some of the interesting things that LiveMore is doing in this space, especially around its “ongoing care fee” for brokers, which helps to encourage annual customer care calls to help identify potentially vulnerable customers. It’s nice to see something fresh in this space.
Hero to Zero
Accord, Barclays, Halifax and HSBC – for their income multiple and high-LTV changes
LiveMore – for its ongoing care fee
The prospect of another good remortgage year
The threat of money laundering in the UK property market, as shown in the Pandora Papers
The ongoing cladding and ESS1 form saga – it is still as clear as mud
What Really Grinds My Gears?
This is often the hardest section to write as, to be honest, I don’t like to moan too much. I prefer to look through rose-tinted glasses at our industry and how hard everyone works in it to do the very best they can for their clients.
We all work hard. We have all had to endure, like everyone else, a strange kind of existence where everything we thought we knew was thrown up in the air. But, like we always do, we adapted and delivered an extraordinary effort over the course of the past 18 months.
Perhaps an even bigger challenge now is how we go back to normal, and what the hell the new normal is. It wasn’t long ago it was considered a massive benefit to be allowed to work from home a couple of days a month; something that even formed part of promotion talk or bonuses. Now people are struggling with the concept of working in the office just two or three days a week.
Every change is laced with opportunity for those who look at the positives
As ever, eventually we will adapt to a whole new flexible and fluid way of working, and will take the best of both extremes, but it will take time. First, everyone needs to feel safe and comfortable about coming into the office environment again, and we will all have to work harder to ensure company culture is appealing and strong enough to really mean something. We have to listen to each other, respect everyone’s views and be prepared to be
flexible rather than dictatorial in our approach.
And we must always look at the positives rather than just the negatives. A new means of working brings opportunities, new technologies and a way to attract a new, diverse workforce into our industry, along with a new generation of clients.
Every change feels hard, but every change is laced with opportunity for those who look at the positives.
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